Heresy – The Reformation of finance

Many people refer to crowdfunding as the democratisation of finance, I am one of them. But speaking in the Netherlands recently I realised that in fact we are experiencing a much more profound change. It is in fact the Reformation of Finance and I am a heretic.

Very recently I had the pleasure of visiting Utrecht in the Netherlands to speak at the launch of a new crowdfunding platform into the Dutch market. Tailwind Crowd is a lending and reward platform founded by a suitably international group of Spanish, Mexican and Dutch entrepreneurs.

Being an economic historian by training I couldn’t help but acknowledge the historical links between Spain and the Netherlands, and the history of Dutch financial innovation through the origins of the VOC and the Amsterdam Bourse. In a nod towards that period I introduced my words at the Cervantes Institute by displaying an image of “The Fight Between Carnival and Lent” by Peter Bruegel the Elder.
Bruegel, a Dutch painter, chose the crowd in all its diversity and complexity as the subject of the picture. This was a distinctive approach in the 1560’s when he painted it, given most art till that time had been commissioned and focused on wealthy or privileged individuals or drew on classical themes in the Renaissance style. But here the focus is spread cross the average late medieval man and woman in the street in all their rich colour. A suitable metaphor for a crowdfunding presentation I thought. But slowly it seemed to me that we can extend the metaphor further.

Bruegel was also a print maker, consorting with map makers dangerously marking out and sharing the known world. Print makers, the revolutionary technologists of the time were also ,unusually, not organised in the early days into Guilds and so were not an exclusive or restrictive “caste”. Their activity and skills were at the heart of spreading and popularising what had till then been the exclusive domain of the rich and privileged namely books and art.

Access to this type of technology put the Low Counties at the centre of the Reformation. Tired with the corruption and monopoly of the established Roman church, alternatives were being proposed. People were seeking to take institutions out of their route to salvation and commune with their God more directly. Courageous speakers articulated these views at great personal risk and others took incendiary steps to make these ideas a reality. Tyndale Bible, for example, was translating the bible into English making it more widely available and setting the path for taking religion out of the hands of being mediated through and interpreted solely by an anointed elite of the priesthood.

This then was the disintermediation of religion. This was the broadening of the faith. It became possible to imagine owning your own conscience and faith.

An historic and monumental schism with an accepted and enforced orthodoxy that has cost much blood, pain and death down the centuries. But that orthodoxy was challenged, and broken, even though it had seemed so stifling and entrenched and unshakeable in its power and permanence to the contemporaries of Bruegel.

And so it seems to me the simple metaphor I began with rang ever more true to the profound changes we are experiencing in the crowd economy. It seems appropriate that the self proclaimed “masters of the universe” and the self styled “sophisticated investors” are no longer the sole orthodoxy, no longer the only faith to financial salvation. They have been shown to be untrustworthy, corrupt, self serving and fallible.

And so I declare that I do not think that what is happening in alternative finance is any less significant, profound or any less enduring than that which happened in religion back in the 16th century. In the same way that those changes ripple down through the years touching and launching so many developments and changes in progressive emancipation we take for granted today, so too I think we are at the beginning of changing radically the way we imagine the business of commerce and finance. We are at the birth of many new approaches which, whilst recognising that finance has a role to play in our lives, are no longer reliant on an established model or one cadre of anointed intermediaries in order to access and use it.

But just like the Reformation there are those that will say this is heresy. They will say there is only one true faith that to desert it leads only to damnation. They are wrong.

As an unapologetic up heretic and dissenter I am hoping nevertheless that the practice of burning at the stake has passed into history!